Based on the information you provided, it is safe to assume the bank holding your second mortgage sold it to a collection agent. Based on the nature of the debt, it is likely the collection agent bought the debt for pennies on the dollar. (Collection agencies will also work on a contingency basis where they will keep 20%-35% of the amount collected.)
The collection agent is attempting to strong-arm you into accepting their deal. Because you did not mention the amount of the second mortgage, it is impossible for me to opine if the deal offered is attractive or reasonable. Remember you are in the driver seat -- you have the money the creditor wants. Foreclosing on your second mortgage is a legal possibility, but it is unlikely given the depressed value of home prices today.
Start your negotiations with a lump-sum of 10 cents on the dollar. Some will expect that much, and others will want more. When you reach an agreement, get it in writing, and be prepared to send the creditor a check for a lump-sum settlement immediately.
I hope this information helps you Find. Learn & Save.